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The Impact of the Global Financial Economic Crisis on
Egyptian Labour Market – Further Reflections for TC
The Background
The Approach
Facts and Figures
Conclusion
Reflections on the Role of TC: Labour Market and Employment
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The Background
The first MKI-vetEP study and reflections on the effects of GFEC in Egypt was
undertaken in March 2009
The Main Challenges Remain as Follows:
Challenge to forecast and draw up strategies with regard to GFEC as
it must be seen as a complex macroeconomic phenomenon
Challenge to attribute changes in employment unambiguously and
causally to GFEC (fuel and food crisis? other constraints of economic
development?)
Challenges to rely on quantitative data
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The Background
Challenge to Rely on Valid Data – Examples:
Total Employment in Textile & Clothing Sector:
According to CAPMAS: 278,267
According to Industrial Dev. Authority: 400,384
Exports Textile & Clothing 2007 in US$:According to CAPMAS: 6,52 Mio
According to GOEIC: 2,34 Mio
Labour Force 2003: According to Ministry of Planning: 20,2 Mio
According to the World Bank: 26,7 Mio (Unemployment rate?)
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The Approach
To reflect and draw up conclusions on the impact of GFEC and it‟s
further implications on labour market and employment interventions,
this presentation relies on :
Studies available (see Annex)
Interviews with stakeholders and representatives of LM in Egypt
Media, press reviews (Employment Express of MKI-vetEP)
Plausibility considerations
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Are We Done with the GFEC??
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The Main Findings at a Glance
The effect of GFEC on Labour Market has to be observed on the long run
due to the different waves of effects on economy and LM (2014 etc.)
Impact of GFEC can lead to increased structural unemployment
(orientation towards informal sector, discouragement of seeking for
employment choose option to stay in educational system => 80/20)
GFEC affected mainly vulnerable groups of employment, women and youth
Economic growth must not reduce poverty (Source: M. Grossmann, 2009)
Employment structures: economic growth must not lead to increased
employment (value of GDP figures??)
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The Main Findings at a Glance
GFEC affected selected sectors of Egyptian LM, mainly Textile and
Clothing
Egyptian strategies to mitigate the impacts of GFEC have been relatively
fast and prudent. On the other side, they lack targeted and long term
strategies (mainly infrastructural projects, scarcely long term employment
intensive and productive sectors)
Well established manufacturing companies could rely on governmental
strategies, e.g. shift production orders from private to governmental order
(El Sewedi SAE)
And the good thing still...
Compared to other countries, the impact of GFEC on Egypt is still relatively
modest, due to it‟s less affiliation to the global financial market
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Egyptian Background - Some Figures
Source: CAPMAS 2008, Census data; ILO Key indicators of the Labour Market
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GFEC Effects on Employment -
Facts and Figures
2008 2009
Source: CAPMAS 2008, Census data; ILO Key indicators of the Labour Market
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GFEC - Effects in Facts and Figures
Trade (major transmission channel of the crises)
Trade tripled between 2004-08
In 2009 it fall by 25%
Foreign Direct Investment*
Fall from 16,9 % of GDP 4%
*Egypt ranked as 1st country in Africa and 2nd in MENA in FDI (after Saudi Arabia)
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GFEC - Effects in Facts and Figures
Tourism sector is particularly sensitive to external economic
uncertainty (Beside GFEC, H1N1 played a considerable role)
Tourism rate of growth 29,5% (07/08) 2009 6,0%
Decline in number of residents 2009 -16,3%
Negative impact of GFEC for all items: revenues, occupancy, liquidity,
investment etc. except wages!
Employment in Tourism in 2007:
No measurable decline
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GFEC - Findings on Employment
Tourism sector is scattered over a wide range of economic activities
(Hotels, Restaurants, Shops, travel agents etc.) This is worthy to note with
regard to the limited validity of figures on hotel employment:
Red Sea, South Sinai: 74,0% hotel capacity / 64,0% of employment
Greater Cairo region: 18,8% hotel capacity / 28,9% of employment
Impact of GFEC on Tourism Sector in General:
51,3% of hotels asserted the existence of an impact of GFEC and
indicated an influence on their employment policy
Impact of GFEC is the same for all workers
(not biased against a particular group of workers)
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GFEC - Findings on Employment
Negligible impacts: Lay offs (permanent or non permanent)
Low impact: Reduction in non-pecuniary benefits, wages, compulsory
vacation
High impact: Reduction in incentive payments
Some Indicators on Tourism Employment
Tourism sector tend to permanent employment
Only 3,8% non-permanent employment
Wages: Male workers L.E. 840
Female workers L.E. 673
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GFEC - Findings on Employment
Some Indicators on Tourism Employment
Number of Female Employment in Hotels, Tourist Villages and restaurants
(% female)
CAPMAS, LFSS
2005 2006 2007 2008
Hotels, Tourist
Villages7,4 6,4 6,0 ?
Hotel, Rest. 2,5 4,1 3,3 2,4
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GFEC - Findings on Employment
Textile & Clothing
26.4% of total industrial production in Egypt
20,1% of industrial sector firms
T & C sector employs 415,333 workers which makes it the largest
industrial employer in Egypt (source: IDA 2010)
34.610 Job Losses
(IDSC reduced the decline due to reduction in production, slowdown of
the sector, especially the private sector growth which would have
happened anyway)
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GFEC - Findings on Employment
Impact on Textile & Clothing 2008 -2009: (Source: El Haddad, 2010)
Production - 21%
Domestic sales - 16%
Exports - 22% (year before -16%)
Impact on Employment 2008- 2009 (all of them in the textile sector NOT Clothing)
Total - 3,2%
Out of these:
Woman 3,4%
Informal 10%
81% of firms reported laying offs of illiterates, very low skilled workers
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GFEC - Findings on Employment
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GFEC - Findings on Employment
Main problems from Employers Perspective:
Scarcity of trained and educated workers 77%
“Youth has no desire to work in the sector” 70%
Low wages 60%
High resignation rates 40%
Working conditions (distance home-work) 31%
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The GOE adopted a set of measures to counteract the potential adverse
implications of the GFEC like Fiscal Stimulus Packages to:
Promote economic growth
Support the labor market
Create new employment opportunities
➡The measurement of the outcome appears difficult due to
Data Limitations Revisited
Fiscal & Monetary Measures
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Fiscal & Monetary Measures
Recommendations from IDSC:
Data improvement strategies.
Fiscal stimulus: permanent vs. temporary.
Alternative analytical framework (LP, CGE, stochastic control, etc.)
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Summary of Recommendations to Mitigate
Effects of GFEC
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Employment Strategies - MoMM/ILO 2010
To Implement or Foster Various ALMP Measures Through:
Public work programs
Support SME
Establishment of LMI Information system
Incentives for vocational training
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Conclusions - or - What does that mean for
TC?
Effects of GFEC are obvious and tend to deteriorate further on the
difficult situation of Labour Market and Employment in Egypt and
other countries
To further intensively promote “Employment Issue” in it‟s urgency as part of
product portfolio of GTZ
To grasp the „chance‟ to further sharpen and profile TC approach and
improve the effectiveness of the different approaches
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Reflection on the Role of TC in LM and
Employment
The Main Challenges are:
1. How to tackle the complexity of “Labour Market and
Employment‟ issue?
2. How to tackle LMI constraints
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Reflection on the Role of TC in LM and
Employment
1. How to tackle LMI constraints?
To strengthen cooperation with entities/organizations already working
on development and improvement of LMI Systems (ILO, Ministerial
entities, World Bank etc.)
2. How to tackle the complexity of “Labour Market and Employment‟
issue?
Reduce complexity through:
Focused and selected area of intervention/approach
Improvement of “multi resort” approach
Improvement of dealing with „multi-stakeholder‟ settings
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How to contribute an added value?
To look beyond figures and quantitative assumptions through
development of qualitative beside quantitative criteria
To diversify paradigms emerging different concepts and herewith
areas of interventions (e.g. the paradigm of „supply and demand‟)
Reflection from MKI-vetEP‟s
Point of View
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Strategies like
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Classical ALMP and PLMP
Targeted educational
strategies
Labour
Market
Information
Systems
Quantitative
assumptions
and criteria Assumed circle
of
improvement
Some Reflections
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Excerpt of some Case Studies:
Agro Tech - Private Company, El Fayoum (500 employees)
700 L.E. Basic salary plus contract, health insurance, accommodation,
transport, and meals)
Demand for Planting, Pruning, Harvesting: 50 permanent workers
- still not placed
EGP Agro Business, El Fayoum
- 800 L.E. basic salary plus contract, health insurance etc.
Demand for green house, grape, cattle: 11 permanent workers
- still not placed
El Sewedi SAE, 6 of October, Greater Cairo
700 L.E. basic salary (prob. period, contract after 6 month, training, insurance etc.)
- Demand new production line: 120 - 140 permanent worker
- placed after 6 month 33 employees
➡ High demand for work force (recruitment, retention
management)
➡ see slide19: study on Top Problems of Textile Industries
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Conclusion of Case Studies:
➡ High demand for work force (recruitment, retention
management)
➡ see slide19: study on Top Problems of Textile Industries
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Strategies like
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Classical ALMP and PLMP
Targeted educational
strategies
Quantitative
assumptions
and criteria
Labour
Market
Information
SystemsAssumed circle
of
improvement
Further Reflections
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Growing „supply‟ Tightened Labour
Market
e.g. Job Creation
Strategies based on
paradigm of
„supply and demand‟
Increased
Unemployment
LM provides high
employment potential
(unfilled vacancies)
Untapped potential of
educated Labour Force
(e.g. women)
Unused
potential
e.g. Job Quality
Strategies based
on paradigm of
„potential‟
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Problem or Deficit-Oriented
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Some Reflections on „Supply and Demand‟
DemandSupply
fill the gap/deficit through
different strategies
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Expectations
Oriented towards mutual Expectations
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Some Reflections on „Supply and Demand‟
Expectations
Improve the quality of
integration of mutual
expectations and potential
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Expectations
What can I do, to
better generate
income?
How can a find a
suitable work?
What means „work‟?
Potential Oriented
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Expectations
What can I do to
better find suitable
workforce?
What can I do to
better keep my
workers?
„Employment Facilitation‟
= Support to meet the
mutual expectations
Some Reflections on Supply and Demand
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Expectations
What can I do, to better
generate income?
How can a find a
suitable work?
What means „work‟?
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Expectations
What can I do to better
find suitable workforce?
What can I do to
maintain my workers?
based on QUALITATIVE
criteria with high regard to
CULTURAL settings
„Employment
Facilitation‟
Some Reflections on Supply and Demand
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Summary of Reflections
To combine effectively „classical‟ approach (supply/demand) with
innovative concepts (qualitative criteria underlying baselines, potentials
and constraints of specific cultural settings)
To define a smart position („USP‟?) of TC (GTZ, BMZ) within the
landscape of the different stakeholders, which adds value to all the
different approaches and levels of interaction
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Summary of Reflections
To build on assets, capable partners etc., the system is providing in itself
(ppp and public entities)
To build on already existing structures with high demand and high potential
for change and development e.g.:
Cooperation already active in field of „Employment and Labour Market‟
(e.g. MKI - DS entities, Chambers etc.)
Cooperation with reasonable entities out of private sector
(e.g. Qualified Industrial Zones)
Strong linkage with suitable policy concepts and developing entities
like CSR policies
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Thank you very much for your
appreciated attention!
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Abbreviations:
IDSC: The Egyptian Cabinet Information and Decision Support Center
CAPMAS - Central Agency for Public Mobilization And Statistics
GOEIC – General Organization for Export and Import Control
ILO - International Labour Organization
IMF – International Monetary Fund
AmCham – American Chamber of Commerce
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Sources:
ILO 2010: Global Employment Trends, Jan 2010
ILO 2009: The global economic crisis and developing countries: transmission channels, fiscal and
policy space and the design of national responses, Iyanatul Islam, Employment Policy Department, ILO, Geneva
IDSC 2010: Implications of the Global Financial and Economic Crisis on the Tourism Sector in Egypt, Dr. MohayaZaytounAMCHAM/ILO, Arne Klau 2010: Impact of the Economic Crisis on Trade, Foreign Investment, and Employment in
Egypt
World Bank 2009: Global Monitoring Report
MKI-vetEP 2009: Effects on financial and economic crisis on employment in Egypt – conceptual considerations
and an analytical approximation
GTZ, Matthias Grossmann, Juni 2009: Afrika und die Wirtschaftskrise: mögliche Auswirkungen auf
breitenwirksame Entwicklung Herausforderung und Perspektiven für die Umsetzung der MDGs
IDSC 2010: Measuring the Impact of teh Egyptian Fiscal Stimulus Package
SELLER /GTZ, Okt. 2009: Ergebnisbericht der SELLER Task Force zur Finanz-und Wirtschaftskrise in
Südosteuropa, Südkaukasus und Zentralasien
Amirah El-Haddad, Ass. Prof, Cairo University, 2010: Effects of the Global Crisis on the Egyptian Textiles and
Clothing Sector: A Blessing in Disguise?
ILO Dec 2009: The Global Jobs Pact in Egypt
Roundtables on Mitigating the Impact of the Global Economic Crisis on Egypt‟s Economy and Labour Market
during 2009/10
Interviews with: IMC, IDSC, German Chamber of Commerce, CEO‟s & HR Manager of Egyptian companies and
Egyptian Job Seekers, 2009/10